demand & supply, profit loss, inflation & price index section 1 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Answer: (b)

Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. Since it is relative to other currencies so the internal price remains unchanged.

It causes a country’s exports to become less expensive and imports more expensive.

Devaluation is a monetary policy tool used by countries that have a fixed exchange rate or semi-fixed exchange rate. It is often confused with Depreciation and is the opposite of revaluation.

Answer: (a)

The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend.

Participants borrow and lend for short periods of time, typically up to twelve months. Money market trades in short-term financial instruments commonly called “paper.”

Answer: (c)

In order to curb inflation if CRR is increased, then it may take liquidity from markets as banks will have to deposit more money with RBI.

Moreover, inflation may also be curbed by Permitting Central/State agencies to import duty-free pulses and sugar.

However, Decreasing SLR will leave more money to banks to give loans, which in turn will lead to inflation.

Answer: (b)

Answer: (a)

An increase in absolute and per capita real GNP do not connote a higher level of economic development, if poverty and unemployment also increase, because this means the growth is not inclusive. The benefits of economic development are not reaped by many and growing inequality will rise.